Exclusive: Cape Coral family pays Wells Fargo for home bank didn't own

Jun. 28, 2011

Brian Barnhart, with his wife, Holly, and daughters, Olivia, 6, and Bailey, 3, is in a legal battle with Wells Fargo to keep his house in Cape Coral. Barnhart bought the house for $153,000 in cash in November before learning that Wells Fargo did not own the house to sell to him. Barnhart also spent another $80,000 renovating the home. / JOHN DAVID EMMETT/news-press.com

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Brian Barnhart and his wife Holly are worried about losing their home after buying it from a bank that didn’t own the title. “This is our home and we want to stay,” said Holly Barnhart, a mother of two girls and eight months pregnant. / KINFAY MOROTI/news-press.com

At the heart of the problem is a mortgage foreclosure lawsuit filed by Wells Fargo in 2007 against Richard Riccobono for a mortgage he had on the house. The bank won the suit and then took back possession of the house, but moved July 30, 2009, to set aside its ownership.

That caused ownership of the house to revert to Riccobono.

But on Nov. 3, 2010, Wells Fargo sold the house to the Barnharts - who discovered two months later they didn't really own it when they applied for a mortgage.

Their plight is the latest in a string of cases in which people are suffering the aftershocks of the wave of foreclosures that swept through the county after the real estate bubble burst at the end of 2005.

Foreclosures in Lee County surged to an all-time high of 2,665 in November 2008 before declining. In May, only 345 were recorded.

But the effects remain with us as the excesses of the past take their toll:

- Zombie notes: Some foreclosure defendants are finding the deal they made with the bank isn't what they believed - their debt wasn't canceled after all.

- Rocket docket: The American Civil Liberties Union is challenging the high-speed court hearings set up to blast through the county's backlog of foreclosure cases. Some homeowners were denied their constitutional rights in the process, according to the ACLU.

- Provenance and paperwork: Hundreds of foreclosure cases have been abruptly pulled back by banks concerned that lawyers "robo-signed" the documents without looking at them or that the true ownership or origin of the note (known as "provenance") was in doubt.

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So what went wrong with the Barnharts' purchase?

"We have no way of knowing," said Lee County Clerk of Court Charlie Green, but a lot of sloppy work got through in the waves of foreclosures that followed the boom.

Someone involved in the sale should have spotted the fact Riccobono still owned the house, Green said.

But as mortgages were bundled during the boom, traded electronically and eventually sold to investors in huge packages, mistakes were made, he said.

"We had millions of dollars pouring in here and everybody wanted to lend money," Green said - the result was the ownership of many properties remains in doubt.

In some cases, he said, "I think the title's going to be so cloudy that you never get clear title."

Bank denies wrongdoing

Wells Fargo maintains that although it is the trustee for the investment entity that mistakenly sold the house, the bank had no role in what happened.

Vickee Adams, vice president of mortgage communications for Wells Fargo, said the bank isn’t responsible for what went wrong in this case even though “the name of the trustee may appear on foreclosure documents.”

She said that “As trustee, we administer the trust on behalf of the trustees that own the loans, which means we determine the amount of payment due to each bondholder and then distribute the funds received from the mortgage servicer. Under the contract governing our role as trustee, we don’t have the authority to determine how a loan is serviced including whether or not it is modified or foreclosed.”

As the trustee, Adams said, “We rely on the servicer to make the right decisions in administering the loan and bringing foreclosure actions.”

There was no immediate response from American Home Mortgage Servicing Inc., which is the servicer for the loan and handled the sale, or from Powerlink Settlement Services of Coraopolis, Pa., which prepared the deed and wrote a title insurance policy for the house.

Brian Barnhart said the emotional shock from all that's happened has ruined what should have been a joyous period in their lives.

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"My wife is 8 1/2 months pregnant," he said. "She's miserable. It's supposed to be our last kid, our most enjoyable time in our life. I tried to keep it from her as long as possible but she knew something was wrong."

They also find themselves suddenly vulnerable financially, a constant source of stress, Barnhart said. The house is their main asset and at least for now it's not even theirs.

"Man, we've put so much money into it," he said.

Riccobono was shocked when told this week about what happened and said nobody ever informed him he still owned the house.

"I swear I know nothing about this," he said in astonishment when contacted at Tampa-based Supreme Carpet Care and Flood Restoration, where he works.

As far as what happened to Barnhart: "That's not right. Something's got to be done," said Riccobono, 50, who offered to help any way he can. "He must be nervous, he's in that house with $230,000 in it and he doesn't own it."

Seeking answers

Nobody involved with the situation is admitting to wrongdoing so far, Pankow said,

For the Barnharts to get clear title, he said, "They (Wells Fargo and American) have to re-foreclose the property."

But, he said, "I'm not sure that's going to work" because there are several liens on the house senior to the ones Wells Fargo has, and it's not clear if they need to be paid off as well.

In any event, Pankow said, "I'm demanding they make it right. They either need to give my client clear title or pay my client for his damages."

Lee County Property Appraiser Ken Wilkinson said at least what happened to the Barnharts is a rarity.

"It's an unusual circumstance," he said. "We're just hoping we figured it out."

His staff figured out something was off about the house's ownership and notified Powerlink, which prepared the deed, according to a staff memo.